# COLLECTOR OF ESTATE DUTY v. MIS R. KANAKASABAI AND ORS

- **Citation:** [1973] 3 S.C.R. 747
- **Court:** Supreme Court of India
- **Decided:** 1973-03-16
- **Case number:** Civil Appeals Nos. 1770 of 1970
- **Bench:** K. S. Hegde, P. )AGANMOHAN Rl!DDY, Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/collector-of-estate-duty-v-mis-r-kanakasabai-and-ors-5932
- **Pages:** 8

## Headnote

Estaie Duty Act, 1953 ss. 10 and 12-Applicability of.
R dies in 1959 leaving behind him four sops, some grandsons, wife
and daughter.
These accountable persons furnished an account of the
properties passing on the death di R to the Deputy Controller of Estate
Duty.
The Deputy Controller added to the return made the value of
certain properties settled by the deoeased on his wife, sons, grandsons and
daughter on the ground that the deceased had reserved to himself an
interest for life in the properties comprised in the above settlements, within
the meaning of s. 12 of the Estate Duty Act 1953.
The deed in favour
of the sons and the minor grandsons contained a R'rovision to the effect
that these would have to pay to the deceased during his lifetime a sum
of Rs. 1,000/. a year for his domestic expenses; the deed in favour of
the daughter contained a Provision that she would have to maintain him
and bi.s wife for their lifetime; the deed in favour of the wife expressed
a hope that she would support him in his lifetime.
In al'peal the Central ·Board of Direct Taxes held that the settlements fell within the scope
of s. 12 or at any rate ~t s. JO of the Act. The High Court in reference held (I) thats. 12 was wholly inapplicable to the facts of the cue;
(ii) that even ·under s. IQ, !IOI the entir~_yalue of the property settled on
the various beneficiaries but only the value of the interest reserved by the
deceased to himself during his life time could he taken into consideration :
(iii) that the deed in favour of the wife did not reserve any benefit in
favour of the dtoceased as it expressed only a hope. The Revenue as well
as the asmsees appealed to thIS Court.
Allowing the appeal of the assessees,
HELD : (i) So far as the stipulation contained in the deed in favour
of the wife of the deceased was concerned it was merely a hope and expectation and no enforceable liability as such was created. The High Court
was therefore right in holding that no part of the property ~tied on the
wife of the deceased could be taken into consideration in computing the
value of the property that passed on the death of the dOC<Oased. [751A-Bl
(ii) The High Court was further right in holding that s. 12 was wholly
inapplicable to the facts of the case. It wls n(!body's oase that the beneficiaries became entitled to the properties settled on them after the death
of the deceased.
There was no support for the contention of the Revenue
that an interest in the propei-ties settled was reserved to the
deceased
during his lifetime or fur any period after the properties were settled; nor
was. there any provision in the deeds enabling the deceased to reclaim the
property or its possession under any circumstances.
None of the conditions laid down in s. 12(1) were attracted to the provisions contained in
the deeds of settlement.
(7510-FJ
(iii) lhe facts of the case also did not come within the scope of s. IO,
The provisions for ..,niml payments and maintenance made in the deed•
were not cha;ged on the prol'°rties settled. Hence the deceased could . not
he said to have retained any mterest in tne pro,P;rties settled. Therefore it
could not be said that he retained any benefit either in the properties settled or in respect of their possession. !7S4 A-BJ
748
SUPREME COURT REPORTS
[1973] 3 S.C.R.
If, as contended by the Revenue, the expression "of any benefit to him
by contract or otherwise" in s. 10 mean any benefit under the gift, the
legislature should have said so.
There was no difficulty in saying so. It
is a well accepted rule of construction that if a taxing prgvision i& ambiguous and is reasonably capable of more than one interpretation, that interpretation which ·is beneficial to . the subjecl must be adopted. It is
impermissible for the court to read into a taxing provision any words
which are not there or exclude words which are there.
The·. words found
in the provisiop must be given their natural meaning.
[753F-Gl
George De Costa v. Controller of Estate Duty M

## Text

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747
COLLECTOR OF ESTATE DUTY
v.
MIS R. KANAKASABAI AND ORS.
March 16, 1973
(K. S. HEGDE, P. )AGANMOHAN Rl!DDY AND H. R, KHANNA, JJ.)
Estaie Duty Act, 1953 ss. 10 and 12-Applicability of.
R dies in 1959 leaving behind him four sops, some grandsons, wife
and daughter.
These accountable persons furnished an account of the
properties passing on the death di R to the Deputy Controller of Estate
Duty.
The Deputy Controller added to the return made the value of
certain properties settled by the deoeased on his wife, sons, grandsons and
daughter on the ground that the deceased had reserved to himself an
interest for life in the properties comprised in the above settlements, within
the meaning of s. 12 of the Estate Duty Act 1953.
The deed in favour
of the sons and the minor grandsons contained a R'rovision to the effect
that these would have to pay to the deceased during his lifetime a sum
of Rs. 1,000/. a year for his domestic expenses; the deed in favour of
the daughter contained a Provision that she would have to maintain him
and bi.s wife for their lifetime; the deed in favour of the wife expressed
a hope that she would support him in his lifetime.
In al'peal the Central ·Board of Direct Taxes held that the settlements fell within the scope
of s. 12 or at any rate ~t s. JO of the Act. The High Court in reference held (I) thats. 12 was wholly inapplicable to the facts of the cue;
(ii) that even ·under s. IQ, !IOI the entir~_yalue of the property settled on
the various beneficiaries but only the value of the interest reserved by the
deceased to himself during his life time could he taken into consideration :
(iii) that the deed in favour of the wife did not reserve any benefit in
favour of the dtoceased as it expressed only a hope. The Revenue as well
as the asmsees appealed to thIS Court.
Allowing the appeal of the assessees,
HELD : (i) So far as the stipulation contained in the deed in favour
of the wife of the deceased was concerned it was merely a hope and expectation and no enforceable liability as such was created. The High Court
was therefore right in holding that no part of the property ~tied on the
wife of the deceased could be taken into consideration in computing the
value of the property that passed on the death of the dOC<Oased. [751A-Bl
(ii) The High Court was further right in holding that s. 12 was wholly
inapplicable to the facts of the case. It wls n(!body's oase that the beneficiaries became entitled to the properties settled on them after the death
of the deceased.
There was no support for the contention of the Revenue
that an interest in the propei-ties settled was reserved to the
deceased
during his lifetime or fur any period after the properties were settled; nor
was. there any provision in the deeds enabling the deceased to reclaim the
property or its possession under any circumstances.
None of the conditions laid down in s. 12(1) were attracted to the provisions contained in
the deeds of settlement.
(7510-FJ
(iii) lhe facts of the case also did not come within the scope of s. IO,
The provisions for ..,niml payments and maintenance made in the deed•
were not cha;ged on the prol'°rties settled. Hence the deceased could . not
he said to have retained any mterest in tne pro,P;rties settled. Therefore it
could not be said that he retained any benefit either in the properties settled or in respect of their possession. !7S4 A-BJ
748
SUPREME COURT REPORTS
[1973] 3 S.C.R.
If, as contended by the Revenue, the expression "of any benefit to him
by contract or otherwise" in s. 10 mean any benefit under the gift, the
legislature should have said so.
There was no difficulty in saying so. It
is a well accepted rule of construction that if a taxing prgvision i& ambiguous and is reasonably capable of more than one interpretation, that interpretation which ·is beneficial to . the subjecl must be adopted. It is
impermissible for the court to read into a taxing provision any words
which are not there or exclude words which are there.
The·. words found
in the provisiop must be given their natural meaning.
[753F-Gl
George De Costa v. Controller of Estate Duty Mysore, 51 I.T.R. 497,
considered and applied.
Mohammad Bhai and Anr. v. Controller of Estate Duty, Andhra Pradesh, 69 I.T.R. 770, held inapplicable.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1770
of 1970 and 474 1973.
·
Appeals by special leave from the judgment and order dated
April 9, 1969 of the Madras High Court in Tax Case No. 2
of 1966 (Referenee No. 1 of 1966).
N. D. Karkh;,is, S. P. 'Nayar and R. N. Sachthey, for the
appellant (in C.A. No. 1770170) and for respondents (in No.
474173).
M. C. Setalvad, K. Srinivasan and T. A. Ramachandran, for
respondents (in C.A. No. 1770170 and for appeals (in C.A. No.
474/73).
The Judgement of the Court was delivered by
HEGDE, J. Both these appeals, by special leave arise from the
judgment of the High Court of Madras in a Reference under
s. 64(1) of the Estate Duty Act, 1953 (to be hereinafter referred
to as the Act).
The question of law referred in that case is :
"Wllether, on the facts and in the circumstances of
the case, the properties settled It' the deceased by the six
deeds of settlement (two of them dated 26th June, 1951
and four of them dated 30th June 1951) valued at
Rs. 7,38,656/- or any part thereof was not liable for
inclusion in the estate of the deceased as property· deemed to pass on his death."
The High Court answered that question partly in favour of
the Revenue and partly in favour of the assessee. It opined that
the value of the property gifted in favour of the wife ol the deceased is not to be taken into consideration in computing the value of
the property that passed on the death of the deceased. In respect
of the properties gifted to the sons, grandsons and the daughter of
the deceased only the annual payments that had to be made to
·the deceased as well as his right to maintenance should be valued
for the purpose of determining the extent of the right that passed
.on his death.
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COLLECTOR v. KANAKASABAI (Hegde, J.)
749
The facts oi the case material for the purpose of deciding the
question of law formulated above as could be gathered from the
case stated are as follows :
One Ratnasabapathy Pillai was the owner of the properties
with which we are concemed in this case. He died on February
5, 1959 leaving btehind him his four sons, some grandsons, wife
and daughter who· are the accountable persons. They furnished
an account oi the properties passing on the death of the deceased
to the Deputy Controller of Estate Duty, Madras who was the
assessing authority.
The Deputy Controller did 1110! accept the
correctness of the· return made by them. He added to the return
made, the value of the following properties settled by the deceased
on his wife, sons, grandsons and daughter.
Value of property settled
Rs.
I. Deed dated the 26th June, 1951 settling 67.60!
acres ()f agricultura1 lands on Shri D. Na taraja Pillai, son
1,10,408
2. Deed dated the 25th June, 1951 settling 74.91
acres of agricultural lands on Shri R. Ramalingarn Pillai, son
1,12,365
3. Deed dated the 30th June. 1951 settling 80.72
acres of agricultural lands on Shri R. Subramania Pillai, son
1,21,080
4. Deed dated the 30 June, 1951 settling 67.95
acres of agricultural 1ands on Ganapathi PiUai
and Sivakumar Pillai, minor grandsons of
the deceased
1,01,925
5. J»ed dated the 30th June, 19SI settling 133.55
acres of agricultural lands of Snit. T. Sivakumu
AmmaJ,.daughter
l,99,623
6. Deed dated the 26th June, 1951 settling 68.17
acres of agricultural lands on the wife, Smt.
Rajambal
1,02,255
Total
7,38,656
By the deeds in question the deceased settled the properties in
favour of the beneficiaries absolutely and with full power of aliena.
tion. The deeds in favour of his sons and the minor grandsons
contained a provision as under :
"You have to pay me during my life time a sum of
Rs. 1000/ • per year for my domestic expenses."
The deed in favour of the daughter contained a provision :
"You have to maintain myself and my wife during
our life time."
·
The deed in favour of the wife contained the followil!g words:
"In the hope that you will support me during my
life-time, I do hereby settle .... "
750
SUPREME COURT REPORTS
[1973] 3 s.c,R.
1he Deputy Controller held that the deceased had reserved to
himself an interest for life in the properties comprised in the above
settlements, within the meaning of s. 12 of the Act. He accordingly included the value of 'those properties for the purpose of
determining the value of the properties that passed on the death of
the deceased.
The accountable persons appealed to the Central
Board of Direct Taxes, New Delhi.
They contended before the
Board that the conditions or stipulations contained in the deeds
of settlement in faVO!Jr of the sons, minor grandsons and daughter
merely amounted to an expression oJ' a desire and hence could not
be interpreted as a reservation within ';l;ie meaning of s. 12 as those
conditions or stipulations did not detract from the. absolute character of the settlements. With regard to the settlement made in
favour of the wife, it was argued before the Board that the
deceased had expressed only a hope that his wife would support
him and maintain him ducing his lifo time, and the words used
in the deed were vague and unenforce_able in law as a stipulation.
The Board rejected these contentions.
It opined tha_t the main
point in issue in the case was whether an interest in the property
was reserved by the deceased. It held that all the settlements fell
within the scope of s. 12 or at any rate it came withins. 10 of the
Act.
Thereafter at the instance of the accountable persons, the
question set out earlier was referred to the High Court.
We have earlier set out the answer given by the High Co)lrt.
The High Court .held that s. 12 was wholly inapplicable to the
facts of the case and the case has to be considered only under ,
s. 10. Even under that section, the High Court opined, the entire
value of the property settled on the various beneficiaries cannot
be taken into consideration. All that can be taken into considera"
tion is the value of the interest reserved by the deceased to himself
during his life time. Further it held that the value of the properties
settled on the wife of the deceased should be wholly excluded
from consideration as the expression of a wish that his wife should
suppon him during his life time did not amount to a retention of
any benefit in the property settled. On behalf of the Revenue, the
conclusion reached by the High Coun was challenged. It is contended that the value of the entire property settled by the deceased
should have been taken into consideration.
But, on the · other
hand it was contended on behalf of the accountable persons that
neither s. 12 nor s. I 0 is applicable to the facts of the present
case. Before considering whether ss. 10 and 12 or either of them
is applicable to the facts of the case, it is necessary to mention that
in respect o.f the amount made payable by the sons and grandsons
to the deceased, no charge on the property settled was created.
Similarly no charge was created on the property settled on the
daughter in respect of her liability to maintain her father and
mother. So far as the stipulation contained in the deed in favour
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COLLECTOR v. KANAKASABAI (Hegde, /.)
75 I
of the wife of the deceased, it was merely a hope and expectatioa
and no enforceable liabi!fty as· such wis created. Hence we are·
in agreement with the High Court that no part of the property
set'lJej on the wife of the deceased can be taken into consideration in computing the· value iJf. the property that passed on the·
death of the deceased. We are also in agreement with the High
Court that s. 12 is wholly inapplicable to the facts of the. case.
That section to the extent material for our present ·purpose:
reads:
·
"12 ( 1) Property passing under any sett!erii'ent made
by the aeceased by deed or. any other instrument not
taking effect as a will whereby an interest in such property
for life or an'y other period determinable by reference
to death is reserved either expressly or !ly implication to
the settler or whereby the settlor may have reserved to
himself the right by the exercise of any power, to restore
to himself or to reclaim the absolute interest in such
property shall be deemed to pass on the settler's death."
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(2) of s. 12 are not relevant for our present purpose.]
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So far as the applicability of s. 12(1) is concerned, it is no."
body's case that the beneficiaries became entitled to the properties
settled on them after the death of the deceased. There is no support for the contention ct the Revenue that an interest in the properties settled was reserved to the deceased during his. life time or
for any period after the properties were settled; nor is there any
provision in the deeds enabling the deceased to reclaim the property or its possession under any circumstance.
None of the·.
conditions laid down in s. 12 ( 1) are attracted to the provisions
contained in the deeds ct settlement.
Now turning to s. 10,' the portion that is material for our
pre,ent purpose is found in the main section. . The provisos to
that section are not relevant.
The material part of the section
reads : · ·
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''.Property taken under any gift, whenever made, shall
be deemed to pass on the donor's death to the extent
that bona fide possession and enjoyment of it was not
immediately assumed by !he donee and thenceforward
re<ained to the entire exclusion of the donor or of any
benefit to him by c·ontract or otherwise."
This section provides that unless a bona fide possession aiid
enjoyment of the property gifted is assumed immediately after the
gitt by the donee and thenceforward retained to the entire exclusion of the donor' or of any benefit to him by contract or otherwise,.
the said property wil! be deemed to have passed on the death of
752
SUPREME COURT REPORTS
[1973] 3 S.C.R.
the donor.
In other words the section has two parts viz. ( 1) the
donee must bona-fide liave assumed possession and enjoyment of
the property which is the subject matter of the gift to the exclusion of the donor immediately upon the gift and (2) the donee
must have retained such possession and enjoyment of the property
to the entire exclusion of the donor or of any benfit to him by contract or otherwise. Both these conditions are cumulative. Unless
each ol. these conditions is satisfied the property would be liable
to estate duty under section 10 of the Act-see the decision of
this Court in George Da Costa v. Controller of Estate Duty
Mysore(1).
Therein the scope of s. fO came up for consideration. Speaking for the Court this is what Ramaswami J. observed
in that case :
"A gift of itnmova~e property under s.
10 will.
however, be dutiable unless the donee assumes imme-.
-diately exclusive and bona fide possession and enjoyment
1lf the subject-matter of the gift and there is no beneficial interest reserved to the donor by contract or otherwise. The section must be grammatically construed
as follows: "Property taken under any gift, whenever
made, of which property bona fide possession and enjoyment shall not have been assumed by the doriee immediately upon the gift, and of which property bonafide possession and enjoymei:it shaU not have been thenceforward retained by the :lonee to the entire ·exclusion
of the donor from such possession and enjoyment, or
of any benefit to him, by contract or otherwise". The
crux of the section lies in two parts: (1) the donee must
bona fide have assumed possession and enjoyment of the ,
property, which is the subject matter of the .~ift, to the
exclusion o.f the donor, immediately upon the gift, ·and
(2) the donee must have retained such possession and
enjoyment of the property to the entire exclusion of the
donor or of any benefit to him, by contract or otherwise
As a matter of construction we are of opinion that both
these conditions are cumulative. Unless each of these
conditions is satisfied. the property would be liable to
estate duty under s. 10 of the Act".
Proceeding further the learned judge observed :
"The second part of the section has two limbs: the
·deceased must be entirely excluded, (i) from the pro-
·perty, and (ii) from any benefit by contract or otherwise.
It was argued for the appellant that the expression "by contract or otherwise" should lie construed
(I) SJ T.T.R. 497.
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COLLECTOR v. KANAKASABAI (Hegde, I.)
75:J.
ejusdem generis and reference was made to the decision
of Hamilton J. in Attorney General v. Seccombe
(1911 )2, K. B. 688. On this aspect of the case, we
think that the argument of the appellant is justified. In
the context of the section, the word "otherwise" should
in our opinion, be construed ejusdem _ generis and it
must be interpreted to mean some kind of le.gal obligation or some transaction enforceable at Jaw or in equity
which, though not in the form of a contract, may confer
a benefit on the donor.
It was contended on behalf of the assessee that the expression
"of any benefit to him by contract or otherwise" in s. 10 must be
in the property settled and not a benefit arising from the ttansac--
tion resuHing in the gift. To put it differently 'the assessee's contention was that the benefit biy contraot or otherwise must be re--
ferrable to the property gifted because all the earlier conditions
stipulated in the section refer to the_ property gifted. If it was
otherwise, the Counsel for die assessee urged, s. 10 cannot be
considered to have two parts as held in Da Costa's case (supra);
but it must be held to have three pans viz. (1) that the donee
must bona fide have assumed possession and enjoyment of the
property which is the subject matter of the gift to the exclusion of
the donor immediately upon the gift; (2) the donee must have
retained such possession and enjoyment of the property to the
en1ire exclusion of the donor and ( 3) the donor should not have
retained any benefit to him by contract or otherwise under the
gift. It was further urged that it is impermissible for the court to
add the words "under the gift" after the words "of any benefit
to him by contract or otherwise". On the other hand it was contended on behalf of the Revenue that if the donor is entitled to
any benefit under the gift, whether the same is charged on the
properties settled or not, the properties gifted must be deemed to
have passed on his death. The main part of s. 10 is not happily
worded. It is difficult to find out the true effect of the expression
"of any benefit to him by contract or otherwise". Do these words
mean any benefit under the gift ? If that was so, the legislature
should have said so. There was no difficulty in saying so. If a
taxing provision is ambiguous and is reasonably capable of more
than one interpretation, that interpretation which is beneficial to
the sut~ect must be adopted. This is a well accepted rule of construction. It is impermissible for the. court to read into a taxing
provision any words which are not there or exclude words which
are there.
The words found in the provision must be given their
natural meaning. In Da Costa's case, this Court opined that there
are only two parts to the section. We have set out those parts
earlier. The contention of the Revenue runs counter to the reasoning adopted in Da Costa's case. The contention advanced on be-
754
';UPREME COURT REPORTS
[J 973] 3 S.C.R.
·half of the assessee finds support from some of the observatbns
found in Da Costd s case.
The provisions for annual payments
and maintenance made in the deeds as seen earlier are not charged
on the properties se'ttled.
Hence the deceased cannot be said
to have retained· any interest in the properties settled. Therefore
it cannot be said that he re'tained any benefit either jn the properties
settled or in respect of their possession.
Hence in our opinion the facts of case (',J not come within
the scope of s. 10.
We,
accordingly, allow the appeal of the
assessee and hold that the value oi the properties gifted or any
part thereof is not liable to be included in computing the value
of the estate that passed on the death of the deceased. In this
:view, it is not necessary for us to consider the meaning of the word
~extent" found in s. 10. The decision of the Andhra Pradesh
High Court in Mohammad Bhai and Anr. v. Controller of Estate
Duty, Andhra Pradesh(1) rendered by one of us (Reddy J.) does
not bear on the question of law that we have decided.
In the result we allow the appeal of the assessee (Civil Appeal
No. 474 of 1973), vacate the answer given by the High Court and
answer the question referred by the Tribunal in the affirmative and
· in favour of the assessee.
The appeal of the Revenue
(Civil
Appeal No. 1770 of 1970) is dismissed. The Revenue shall pay
the costs of the assessee-one hj:arlng fee.
G.C
C. A. No. 474 of 1973 allowed.
C.A. No. 1770 of 1970 dismissed.
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